DTN Cotton Close: Current-Crop Finishes Fractionally Mixed

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    U.S. all-cotton 2016 production estimate expected predominantly to range narrowly on either side of USDA’s December forecast of 16.524 million bales. Slower weekly export sales generally expected.

    Cotton futures settled fractionally mixed Wednesday, down five to up eight points in the most actively traded 2016-17 contracts ahead of USDA’s weekly export sales-shipments and monthly supply-demand reports.

    March was the only loser, settling at 73.14 cents, near the low of its tight 82-point range from up 62 points at 73.81 to down 20 points at 72.99 cents. It touched the high in early morning, hit thee low about three hours later and chopped back and forth into the close.

    May eked out a two-point gain to close at 73.66 cents, while new-crop December edged up eight points to settle at 71.36 cents.

    Volume rose to an estimated 30,831 lots from 27,628 lots the prior session when spreads accounted for 15,378 lots or 56%, EFP 1,365 lots and EFS four lots. Options volume totaled 4,155 calls and 1,230 puts.

    U.S. all-cotton 2016 production is expected by some analysts and traders predominantly to range narrowly on either side of USDA’s December forecast of 16.524 million bales, up 28% from 12.888 million last season.

    Informa Economics, Memphis-based analytical firm, has estimated the crop at 16.462 million bales, sources said, down a marginal 62,000 bales from the USDA projection. Others expect the final crop to come in higher.

    The USDA raised its December estimate 362,000 bales or 2% from a month earlier. The increase put the upland crop at 15.962 million bales, with the unchanged Pima estimate carried forward at 562,000 bales.

    A 200,000-bale increase to 12.4 million bales in exports is expected by some analysts, based on the recent sales pace, with ending stocks declining a corresponding 200,000 bales to 4.6 million. That would be a 400,000-bale increase in the export estimate in two months.

    The USDA is scheduled to release its updated U.S. and world supply-demand estimates at 11 a.m. Thursday. This will be preceded by the U.S. weekly export sales-shipments report at 7:30 a.m. CST.

    Net upland export sales for the week ended Jan. 5 generally are expected to show a decline from the prior week’s 183,700 running bales but to remain above the pace needed to match USDA’s December export estimate.

    Upland net sales the last four weeks have totaled 1.115 million RB for an average of 278,800 RB, while upland shipments have totaled 948,904 RB and have averaged 237,200 RB.

    This month’s crop report from the National Agricultural Statistics Service will feature an annual summary of 2016 acreage, yield and production.

    Globally, some observers expect no major WASDE changes, barring prior-year revisions. The USDA last month reduced its estimate of the margin by which world production is expected to fall short of consumption by 1.04 million bales to 7.67 million, against a crop shortfall of 14.81 million bales in 2015-16.

    Futures open interest increased 1,390 lots Tuesday to 264,089 lots, with March’s down 355 lots to 175,217, May’s up 200 lots to 43,298 and July’s up 1,342 lots to 23,613. Cert stocks continued to grow, rising 6,233 bales to 108,133. Awaiting review were 1,492 bales at Memphis.

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